Working hours and employment in a trade union local wage bargaining model

The aim of this paper is to measure the effect on employment, and other key economic variables, of worksharing policies, minimum wage variations and some other measures of flexibility in a special framework, based on Holden (1988) and Moene (1988), where two different levels of negotiations for both wages and hours take place and Capital Operating Time is adopted. Within our framework, hours, wages and employment are determined in a three stage process: in the first a tariff hourly wage and a standard work-week will be unilaterally negotiated by a central union; in the second, firms determine hours and employment prevailing until the next period, and finally in the third stage employers and local unions negotiate local hourly wage drift.Working time; Hours réduction; Trade unions; Capital operating Time.